Pension Reforms for Military and Uniformed Personnel
For a long time, military and uniformed personnel (MUP), including soldiers and members of the police force, have enjoyed privileges that are not available to other government employees. These privileges include exemption from monthly pension fund contributions, automatic promotion to a higher rank upon retirement, and a lifetime pension equivalent to the monthly base pay of active personnel of the same rank. However, these privileges have taken a toll on public funds.
According to former finance secretary Gary Teves, the budget spent on MUP pensions has doubled in 10 years, from P64.2 billion in 2013 to P128.6 billion in 2023. It now exceeds the budget needed for the day-to-day activities of active personnel. With the doubling of base salaries for active MUPs in 2018, the pension for retirees has also doubled. Finance Secretary Benjamin Diokno and President Marcos have warned of the potential collapse of the MUP pension fund unless reforms are implemented within the next five to six years.
Recently, a substitute bill on pension reforms was approved by a House ad hoc committee. The bill requires MUPs to contribute a graduated percentage of their salaries to the pension fund, with the government completing the total contribution. However, the bill retains the provision for MUPs to retire at a higher rank, sets the mandatory retirement age at 57, and establishes separate trust funds for the military and non-military uniformed personnel.
While the reform bill is an improvement, there are suggestions by Gary Teves on how to make the system more sustainable and considerate of retirees’ needs. These include: making MUP contributions mandatory and implementing a fair and compassionate graduated deduction rate based on years of service; reevaluating the indexation of pension payments to the base pay of active personnel; and expanding retirees’ access to housing benefits, healthcare, and low-interest emergency loans.
In addition to fixing the pension system, it is crucial for the respective offices of uniformed personnel to update their pension management information system to eliminate delinquent pensioners from the payroll. The Commission on Audit recently discovered discrepancies in the list of Armed Forces of the Philippines pensioners, resulting in overpayment and underpayment. To prevent a similar situation from occurring, the government must ensure proper management of the pension system.
Retired police general and Baguio City Mayor Benjamin Magalong emphasized the need for government officials to shun corrupt practices, such as kickbacks from inflated government projects, to contribute to fiscal sustainability. Senators Ronald “Bato” dela Rosa and Robinhood Padilla expressed concerns that changes in the pension system could lead to the early retirement of uniformed personnel, potentially weakening the country’s security sector. However, House committee on ways and means chair Joey Salceda emphasized that fiscal sustainability is a matter of national security, especially in light of the ongoing conflict in the West Philippine Sea.
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